Having saved for retirement
through an insurer for decades, many consumers in the UK
automatically select the same insurer as the provider of an
annuity.
By not exercising their right
to shop around for the best annuity rate they may be doing
themselves a costly disservice, a risk industry body the
Association of British Insurers (ABI) believes its new initiative
will eliminate.
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The ABI’s solution to the
problem comes in the form of a compulsory code of practice that
will compel insurers to remove the annuity application form in the
communications they send to their customers.
Commenting, ABI director of
life and savings Maggie Craig said: “Not enough people shop around
currently. This new industry initiative has been developed to make
a significant difference to people’s retirement
outcomes.”
According to the ABI, an
increasing number of consumers are already buying an annuity from a
provider which is not their pension provider – 46% of consumers in
2011 compared to 35% in 2008.
In addition, noted the ABI,
about 70% of people consider switching provider.
However, the remaining 30% of
who do not shop around may be losing out.
The ABI noted that 650,000
people turn 65 in the UK every year. This indicates that almost
200,000 people may not be getting the best possible deal on their
retirement income.
